State Farm Bank is not required to pay a civil penalty after settling Consumer Financial Protection Bureau claims that it had allegedly violated the Fair Credit Reporting Act on some auto loan and credit card accounts.
A Dec. 6 consent order alleged that State Farm reported inaccurate customer information to the credit bureaus and pulled credit reports without a permissible purpose. State Farm Bank President and Chief Executive Joe Monk Jr. signed the consent order without admitting or denying any of the findings.
“The concerns outlined in the consent order affected only a small percentage of credit card and vehicle loan applicants, and we are not aware of individual consequences to consumers,” a bank spokesman wrote in an email to Auto Finance News.
Though the consent order did not specify the volume of auto loans affected, State Farm Bank — with $16.7 billion of assets — had an $8.5 billion auto loan portfolio at yearend 2017, according to Big Wheels Auto Finance Data.
Meanwhile, State Farm Bank has been ordered to “not violate the Fair Credit Reporting Act or Regulation V and must implement and maintain reasonable written policies, procedures, and processes to address the practices at issue,” according to the consent order.
State Farm has already started to adjust its credit reporting practices. “Protecting customer information is important to State Farm, and we took this matter seriously,” the bank spokesman said. “The bank strengthened processes and training related to the concerns, including the implementation of voice-recorded customer consent and email consent options for customers.”
The bank practices in question revolve around the consumer lending business, which consists primarily of “consumer credit cards and vehicle loans, many of which are loans to refinance existing vehicle loans,” the CFPB noted.2 - Readers Like This Post